Arotech Corporation Posts EBITDA Profit, Solid Positive Cash Flow and Record Sales for the Third Quarter of 2004.NEW YORK New York, state, United StatesNew York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Quarterly revenues over $16 million - close to triple year-over-year; positive adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become reaches almost $2 million Arotech Corporation (NasdaqNM: ARTX), a provider of quality defense and security products for the military, law enforcement and security markets, today reported record results for the quarter and nine months ending September September: see month. 30, 2004. Revenues for the quarter reached $16.3 million, an increase of more than 185% over the corresponding period in 2003, and 64% more than the previous quarter. For the first nine months of 2004, revenue has grown to over $33 million, 150% more than the corresponding period last year. Adjusted EBITDA for the quarter increased to $1.9 million, compared to an adjusted EBITDA of $614,000 for the corresponding period in 2003. For the first nine months of 2004, the adjusted EBITDA was $391,000, compared to negative adjusted EBITDA (LBITDA) of $1 million for the first nine months of 2003. Net profit, before a non-cash deemed dividend of common stock to certain shareholders, was $151,000, compared to $75,000 in the corresponding period last year. "This has been our best quarter ever," said Robert S Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. . Ehrlich Ehr·lich , Paul 1854-1915. German bacteriologist who conducted pioneering research in chemotherapy and developed the chemical Salvarsan as a treatment of syphilis. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Arotech. "We have met the promise that we made to our shareholders at the beginning of this year, and we are now cash flow positive. It is exactly two years since this management was put in place to rebuild the Company, and I am proud to say that we did indeed rebuild it." "This record achievement stems from a series of successful strategic steps we have taken over the past few years to transform Arotech into a major vendor of security and defense equipment. We have added several excellent companies to our portfolio, and these companies are contributing to our growth and expanding our customer base," concluded Ehrlich. Conference Call Arotech Corporation will hold its third quarter 2004 conference call on Wednesday Wednesday: see week. , November 10, 2004 at 10:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . Those wishing to take part in the conference call should call 1-800-818-5264 (US) or +1-913-981-4910 (international) a few minutes before the 10:00 a.m. EST start time. In addition, an instant replay will be available Wednesday, November 10, 2004 at 1:00 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. until midnight on Thursday, November 11, 2004. The replay telephone number is 1-888-203-1112 (US); +1-719-457-0820 (international). The confirmation number is 895166. Results for the Third Quarter Revenues for the quarter ended September 30, 2004 increased to $16.3 million as compared with $5.7 million for the corresponding period of 2003. This increase is largely attributed to strong sales in the Company's Armored Vehicle Division, as well as the addition of the results of the Company's new acquisitions, FAAC FAAC Freeware Advanced Audio Coder FAAC Ford Amateur Astronomy Club FAAC Family Allergy and Asthma Care FAAC Functional Area Agreement Coordinator (USAF) FAAC Fatal Accident Assessment Committee , Epsilor and AoA, to its results. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. described below and in the table below, for the quarter ended September 30, 2004 increased to $1.9 million as compared with $614,000 for the corresponding period of 2003. Arotech believes that information concerning Adjusted EBITDA enhances overall understanding of its current financial performance and its progress towards cash-flow break even and toward GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). profitability. Arotech computes Adjusted EBITDA, which is a non-GAAP financial measure, as reflected in the table below. Net profit, before a non-cash deemed dividend of common stock to certain shareholders, for the quarter ended September 30, 2004 was a $151,000 as compared with a net profit of $75,000 for the corresponding quarter of 2003. This deemed dividend arises as a result of the exercise by certain shareholders of warrants coupled with the concurrent issuance to them of new warrants. Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net earnings (loss) per share for the quarter ended September 30, 2004 was a net loss per share of $0.03 (with the influence of the deemed dividend described above) and net earnings per share of $0.00 (before the influence of the deemed dividend) as compared with net earnings per share of $0.00 for the corresponding period of 2003. Results for the First Nine Months Revenues for the nine months ended September 30, 2004 increased to $33.4 million as compared with $13.2 million for the corresponding period of 2003. This increase is largely attributed to strong sales in the Company's Armored Vehicle Division, as well as the addition of the results of the Company's new acquisitions, FAAC, Epsilor and AoA, to its results. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA), adjusted to eliminate certain non-cash charges described below and in the table below, for the nine months ended September 30, 2004 increased to Adjusted EBITDA of $391,000 as compared with Adjusted LBITDA of $1.0 million for the corresponding period of 2003. Arotech believes that information concerning Adjusted EBITDA enhances overall understanding of its current financial performance and its progress towards cash-flow break even and toward GAAP profitability. Arotech computes Adjusted EBITDA, which is a non-GAAP financial measure, as reflected in the table below. Net loss, before a non-cash deemed dividend of common stock to certain shareholders, for the nine months ended September 30, 2004 increased to $8.5 million as compared with $3.8 million for the corresponding period of 2003, primarily as a result of higher gross profit offset by non-cash charges. This deemed dividend arises as a result of the exercise by certain shareholders of warrants coupled with the concurrent issuance to them of new warrants. Basic and diluted net loss per share for the nine months ended September 30, 2004 increased to $0.16 (with the influence of the deemed dividend described above) and $0.13 (before the influence of the deemed dividend) as compared with $0.10 for the corresponding period of 2003. Cash Position at Quarter End Cash-on-hand and cash equivalents, restricted collateral deposits and other restricted cash, and available-for-sale marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has stood at the end of the quarter at $4.6 million in cash, $7.2 million in restricted collateral securities COLLATERAL SECURITY, contracts. A separate obligation attached to another contract, to guaranty its performance. By this term is also meant the transfer of property or of other contracts to insure the performance of a principal engagement. and cash deposits due within one year, $1.0 million in long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. restricted securities and deposits, and $129,000 in marketable securities, as compared with $13.7 million in cash and $706,000 in restricted cash deposits due within one year at the end of 2003. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. stood at the end of the quarter at approximately $56.2 million. About Arotech Corporation Arotech Corporation provides quality defense and security products for the military, law enforcement and homeland security Noun 1. Homeland Security - the federal department that administers all matters relating to homeland security Department of Homeland Security executive department - a federal department in the executive branch of the government of the United States markets, including advanced zinc-air and lithium batteries Lithium batteries are primary batteries that have lithium metal or lithium compounds as an anode. Depending on the design and chemical compounds used lithium cells can produce voltages from 1.5V to about 3V, twice the voltage of an ordinary zinc-carbon battery or alkaline cell. and chargers, multimedia interactive simulators/trainers and lightweight armoring armoring (ärˑ·m  ·ring),n . The Battery and Power Systems Division includes Electric Fuel Battery Corporation and Epsilor Electronic Industries Ltd. The Simulation, Training and Consulting Division includes IES Interactive Training, FAAC Incorporated and Arocon Security Consulting. The Armoring Division includes MDT MDT abbr. Mountain Daylight Time MDT (in the US and Canada) Mountain Daylight Time MDT n abbr (US) (= mountain daylight time) → Armor Corp., MDT Protective Industries Ltd. and Armour armour or body armour Protective clothing that can shield the wearer from weapons and projectiles. By extension, armour is also protective covering for animals, vehicles, and so on. Prehistoric warriors used leather hides and helmets. of America, Incorporated. Arotech is incorporated in Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). , with corporate offices in New York, and research, development and production subsidiaries in Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , Colorado, Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and Israel. Except for the historical information herein, the matters discussed in this news release include forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties that may cause actual results to vary significantly. These risks and uncertainties include, but are not limited to, risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc : product and technology development; the uncertainty of the market for Arotech's products; changing economic conditions; delay, cancellation or non-renewal, in whole or in part, of contracts or of purchase orders; and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2003 and other filings with the Securities and Exchange Commission. Arotech assumes no obligation to update the information in this release. Reference to the Company's website above does not constitute incorporation of any of the information thereon there·on adv. 1. On or upon this, that, or it. 2. Archaic Following that immediately; thereupon. Adv. 1. thereon - on that; "text and commentary thereon" on it, on that into this press release.
AROTECH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Nine months ended Three months ended
September 30, September 30,
------------------------- ------------------------
2004 2003 2004 2003
------------ ------------ ------------ -----------
Revenues $33,383,023 $13,232,486 $16,272,521 $5,705,898
Cost of revenues 22,680,921 8,365,212 11,548,948 3,252,323
------------ ------------ ------------ -----------
Gross profit 10,702,102 4,867,274 4,723,573 2,453,575
------------ ------------ ------------ -----------
Research and
development
expenses 1,302,773 762,629 431,146 252,085
Sales and marketing
expenses 3,435,183 2,395,190 1,294,488 757,614
General and
administrative
expenses 9,365,378 3,579,371 2,162,925 1,105,864
Amortization of
intangible assets 1,731,425 727,127 739,400 103,584
------------ ------------ ------------ -----------
15,834,759 7,464,317 4,627,959 2,219,147
------------ ------------ ------------ -----------
Operating income
(loss) (5,132,657) (2,597,043) 95,614 234,428
Financial expenses,
net (3,079,404) (1,084,582) 180,126 (100,761)
------------ ------------ ------------ -----------
Net income (loss)
before taxes (8,212,062) (3,681,625) 275,741 133,667
Tax expenses (286,525) (308,137) (116,460) (31,089)
------------ ------------ ------------ -----------
Net income (loss)
before minority
interest in profit
of subsidiary (8,498,587) (3,989,762) 159,281 102,578
Loss (income) to
minority (35,363) 134,813 (8,655) (25,485)
------------ ------------ ------------ -----------
Net income (loss)
from continuing
operations $(8,533,950) $(3,854,949) $ 150,626 $ 77,093
Net income (loss)
from discontinued
operations - 80,883 - (2,285)
------------ ------------ ------------ -----------
Net income (loss)
for the period $(8,533,950) $(3,774,066) $ 150,626 $ 74,808
Deemed dividend to
certain stockholders
of common stock (2,165,952) - (2,165,952) -
------------ ------------ ------------ -----------
Net income (loss)
attributable to
stockholders of
common stock (10,699,902) (3,774,066) (2,015,326) 74,808
============ ============ ============ ===========
----------------------------------------------------------------------
Basic net earnings
(loss) per share
for continuing
operations $ (0.16) $ (0.10) $ (0.03) $ 0.00
============ ============ ============ ===========
Diluted net earnings
(loss) per share
for continuing
operations $ (0.16) $ (0.10) $ (0.03) $ 0.00
============ ============ ============ ===========
Basic and diluted
net earnings (loss)
per share for
discontinued
operations $ - $ 0.00 $ - $ -
============ ============ ============ ===========
Combined basic net
earnings (loss) per
share $ (0.16) $ (0.10) $ (0.03) $ 0.00
============ ============ ============ ===========
Combined diluted net
earnings (loss) per
share $ (0.16) $ (0.10) $ (0.03) $ 0.00
============ ============ ============ ===========
Basic and diluted
weighted average
number of shares
outstanding 67,072,069 32,276,260 76,744,251 40,371,940
============ ============ ============ ===========
Reconciliation of Non-GAAP Financial Measure To supplement Arotech's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP, Arotech uses a non-GAAP measure, Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization (EBITDA), as adjusted to eliminate certain non-cash charges (Adjusted EBITDA). This non-GAAP measure is provided to enhance overall understanding of Arotech's current financial performance and its progress towards cash-flow break even and toward GAAP profitability. Reconciliation of Adjusted EBITDA to the nearest GAAP measure follows:
ADJUSTED EBITDA
----------------------------------------------------------------------
Nine months ended Three months ended
September 30, September 30,
---------------------- ------------------------
2004 2003 2004 2003
--------- ----------- ------------ ----------
Net loss from
continuing operations
before deemed dividend
to certain
shareholders (GAAP
measure) $(8,533,950) $(3,854,949) $150,626 $77,093
Add back:
Interest expense
(income), net (after
deduction of minority
interest) 3,078,561 1,077,276 (182,557) 100,732
Taxes (after deduction
of minority interest) 286,525 166,175 132,235 23,480
Depreciation of fixed
assets 834,637 529,155 316,305 180,754
Amortization of
inventory adjustment
to market values with
the acquisition of one
of our subsidiaries 586,325 - 586,325 -
Amortization of
intangible assets 1,731,425 732,364 721,074 108,821
----------- ------------ ------------ -----------
EBITDA (LBITDA) (non-
GAAP measure) $(2,016,477) $(1,349,979) $1,724,008 $490,880
============ ============ ============ ===========
Add back certain non-
cash charges:
Expenses attributed on
issuance of shares and
options to consultants
and employees 613,848 184,090 152,987 -
Expenses attributed on
repricing and issuance
of warrants to
investors 1,793,455 123,085 51,071 123,085
------------ ------------ ------------ -----------
ADJUSTED EBITDA
(LBITDA) (non-GAAP
measure) $390,826 $(1,042,804) $1,928,066 $613,965
============ ============ ============ ===========
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